"The pound did not fully participate in yesterday’s relief rally for high beta currencies. The broad-based improvement on global investor risk sentiment was though sufficient to lift cable back above the 1.2200-level after briefly falling below 1.2100 at the start of this week, although EUR/GBP continued to drift higher towards the 0.9000-level,"MUFG notes.

"The relatively disappointing performance of the pound was driven again by further speculation over the prospect of negative rates in the UK...We are still not convinced though that negative rates will be implemented in UK when there is room for other policy options such as extending QE. The heightened uncertainty is set to remain a weight on the pound," MUFG adds.